Average card rates don’t budge
Average rates on new credit card offers remained unchanged Wednesday, according to the CreditCards.com Weekly Credit Card Rate Report.
For the third week in a row, the national average annual percentage rate remained fixed at 14.99 percent.
Most issuers tracked by CreditCards.com left interest rates unchanged. The sporting goods store Cabela's adjusted the APR on the Cabela's Club Visa after the 1-month Libor rate inched up by .01 percent. However, the change was too small to affect the national average.
Unlike most U.S. credit cards, the Cabela's Club Visa is tied to the British Libor rate rather than the U.S. prime rate. Sporting goods enthusiasts who apply for a Cabela's Club Visa are now offered a range of APRs starting at 15.18 percent.
Discover was also active this week. It trimmed the Discover "it" card's promotional APR offer from 14 months to 12 months.
It also introduced a new promotion that doubles the amount of cash-back new cardholders can earn the first year. On June 1, Discover announced that once a Discover "it" card hits its first birthday, Discover will credit new cardholders' accounts with twice the amount of cash they earned over the course of the year.
Despite lax spending, card use up
Discover's latest cash-back promotion is designed to encourage new cardholders to spend. But according to new research from the Commerce Department, consumers' appetite for spending is still surprisingly weak, despite expanding incomes and lower prices on key household goods, such as gasoline.
On June 1, the Commerce Department announced that consumer spending was flat in April after increasing by half a percent the previous month. According to a survey conducted by Bloomberg News, economists predicted that consumer spending would increase by at least 0.2 percent.
Consumers have been cautious about spending throughout most of 2015. However, an additional survey of bank economists released June 2 by the American Bankers Association showed that economists are optimistic that consumers will spend considerably more as the year goes on.
According to the survey of 16 chief economists from banks around the country, economists expect consumer spending to increase by at least 2.7 percent by the end of 2015. They also predict that consumer borrowing will expand by 5.4 percent.
"Solid job growth, improving wages and lower energy costs should encourage more families to spend, " said Bank of America Merrill Lynch economist Ethan Harris in a news release.
The report didn't specify which kinds of debt are expected to increase the most this year.
However, additional research from the Nilson Report shows that Americans are reaching for their credit cards more often and racking up bigger charges on their cards.
According to the Nilson Report's May 2015 newsletter, spending on credit, debit and prepaid cards combined increased by 8.4 percent last year, with credit cards claiming a slightly larger share of overall spending.
Credit card purchases made up nearly 54 percent of all purchases on plastic last year (including credit, debit card and prepaid card purchases) -- up from nearly 53 percent of all purchases in 2013, according to Nilson.
Consumers still aren't using their credit cards nearly as often as they did before the recession. For example, in 2004, card purchases accounted for approximately 67 percent of all plastic-card purchases.
According to Nilson, debit card purchases accounted for 42 percent of all plastic card purchases last year. Prepaid card purchases accounted for just 4 percent.
|CreditCards.com's Weekly Rate Report|
|Avg. APR||Last week||6 months ago|
|Methodology: The national average credit card APR is comprised of 100 of the most popular credit cards in the country, including cards from dozens of leading U.S. issuers and representing every card category listed above. (Introductory, or teaser, rates are not included in the calculation.)|
|Updated: June 3, 2015|
See related: NY Fed: Debt in collections shrinks
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